Paying for Real Estate in Bulgaria: The 3 Options and How to Avoid the Traps

септември 1, 2025 / Posted in  Блог постове, Сделки с недвижими имоти, Услуги

Paying for Real Estate in Bulgaria: The 3 Options and How to Avoid the Traps

Purchasing or selling a property is one of the most significant financial decisions a person will make. While the excitement of finding a dream home or securing a successful sale is often the focus, the final step—the transfer of money—carries the greatest risks. Improperly structuring the payment can lead to serious financial loss, legal disputes, and immense stress.

As a lawyer, I often advise my clients that the devil is in the details, especially when large sums of money are involved. In this article, we will break down the three primary methods for payment in a Bulgarian real estate transaction, their advantages, and their drawbacks, so you can make an informed and secure decision.

The Legal Framework: A Rule with No Exceptions

Before exploring the options, it is crucial to understand one mandatory rule. According to Article 3(1) of the Limitation of Cash Payments Act (LCPA) Закон за ограничаване на плащанията в брой , all payments within the country equal to or exceeding BGN 10,000 (approximately €5,100) must be processed only by a wire transfer or a deposit into a payment account.

This is not a recommendation; it is a strict legal requirement. Failure to comply can result in significant fines for both the buyer and the seller (25% of the sum is physical person, 50% if it is a firm). With that in mind, let’s review the legal and secure ways to finalize your property deal.

Option 1: „The Gold Standard“ – The Notary’s Escrow Account

This is the most secure and protected mechanism for both parties involved. It is often referred to as a „client account“ or „escrow account.“

• How it works:
  1. Before the date of the transaction, the buyer transfers the purchase price into a special, segregated bank account managed by the notary public.
  2. On the day of the signing, the notary certifies to both parties that the funds have been received and are secure.
  3. After the notarial deed is signed and officially registered with the Property Registry, the notary releases the funds to the seller’s account.
• Advantages:
  1. For the Buyer: 100% security that their money will only be transferred to the seller after the transaction is legally complete and they are the registered owner.
  2. For the Seller: 100% certainty that the buyer has the funds available and that they will be received immediately after ownership is transferred. This eliminates the risk of the buyer backing out of the payment.
• Disadvantages:
  1. This service comes with a small additional notary fee, but the peace of mind it provides is invaluable.

Option 2: „The Risky Compromise“ – A Direct Bank Transfer

This is the most common alternative, where the parties agree that the payment will be made directly from the buyer’s bank account to the seller’s, bypassing the notary as an intermediary. While legal, this approach carries risks related to the timing of the payment.

• Scenario A: Payment BEFORE the Deal
  • Risk: Entirely on the buyer. They transfer a large sum of money without a guarantee that the seller will appear to sign the notarial deed.
• Scenario B: Payment AFTER the Deal
  • Risk: Entirely on the seller. They transfer the ownership of their property and are left hoping the buyer will fulfill their promise to pay. This is a classic scenario where a seller can be left empty-handed.
• The Best Solution for a Direct Transfer: Payment AT THE TIME of the Deal
  • Mechanism: All parties are present at the notary’s office. The buyer initiates the wire transfer via their online banking in front of the seller and the notary. Once the seller sees the certified payment order (and ideally, the incoming transfer in their own account), the parties sign the notarial deed. It is essential that the notary explicitly details in the deed that the price was paid on that day via a specific bank transfer.

Option 3: „The Forbidden Fruit“ – Payment in Cash

Let’s be brief: any cash payment exceeding BGN 10,000 for a property is illegal.

A common misconception is that if both parties sign a separate agreement or declaration consenting to a cash payment, they can bypass the law. This is absolutely untrue. A private agreement cannot override national law.

• Risks:
  • Fines: 25% of the transaction value for individuals and 50% for companies.
  • Lack of Proof: A cash payment is difficult to prove in the event of a future dispute.
  • Physical Risks: Carrying large sums of cash, counterfeit banknotes, etc.

Conclusion and Your Lawyer’s Advice

The choice of payment method is not a minor technicality; it is a critical element for the security of your transaction.

1. For maximum security, I always recommend using the notary’s escrow account. The fee for this service is negligible compared to the potential losses.
2. If you opt for a direct transfer, insist that it takes place at the notary’s office and that this fact is meticulously documented in the notarial deed.
3. Never, under any circumstances, agree to a cash payment over the legal limit, no matter how persuasive the other party may be.

Proper preparation and consultation with a good lawyer can save you not only money but also a great deal of trouble. Invest in your peace of mind.